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The Breakfast Briefing

Reclaiming Dow 14000 wasn’t very difficult.

Holding that level will be the tricky part.

The Dow jumped 149 points on Friday and finished a touch above 14000 for the first time in more than five years. The blue-chip average isn’t far from its record high of 14164.53 hit in Oct. 2007.

But if history is any indication, the market’s ride toward all-time highs won’t be smooth from here. Millennium markers have typically acted as short-term barriers toward future gains.

Dating back to 1999, when the Dow first crossed 10000, stocks have struggled once the Dow has crossed these big, round numbers, according to data provided by Schaeffer’s Investment Research.

In the 27 instances since 1999 that the Dow has crossed a 1000-point interval, it has averaged a 0.5% decline in the following week and a 0.3% drop in the ensuing two weeks, yielding positive returns less than half the time, Shaeffer’s says. One-month, three-month and six-month returns following such milestones have, on average, produced negative results. And over a one-year time frame, the Dow has averaged a 4.1% decline following the crossing of such big, round numbers.

By comparison, the Dow typically averages small gains during any given one- or two-week intervals. The longer the time horizon, the bigger the gain the Dow registers, on average.

“These even-level intervals can be psychological barriers for an index as they run into them,” says Rocky White, senior quantitative analyst at Schaeffer’s.

The market ran into resistance when it first hit Dow 10000 in 1999, as well as subsequent 1000 increments all the way up through the initial push through 14000 in the summer of 2007.

“The market has to rally to get to those big numbers,” Bruce Bittles, chief investment strategist at R.W. Baird, told MarketBeat. “That takes some energy. When it finally gets to them, the market is typically overbought and produces some pullback as a result of that.

Bittles says investor sentiment usually gets overly bullish when such millennium markers are reached. That theme is currently on display. Last week’s survey by the American Association of Individual Investors showed bullish sentiment has been above average in nine of the past 10 weeks.

“Optimism is always a mild negative that makes markets vulnerable in the short term,” Bittles says.

Almost a year ago, when the Dow was reclaiming 13000, it spent a few weeks jostling around that level before finally pushing through with conviction.

Yet for now, the bulls seem unfazed by historical trends. They point out that little stands in the way, right now, of the market’s pursuit of record highs.

Biotech drug maker Gilead is expected to report fourth-quarter earnings of 48 cents a share on revenue of $2.44 billion, according to analysts surveyed by FactSet.

Simon Property, the shopping mall real-estate investment trust, is forecast to post funds from operations of $2.17 a unit, earnings of $1.04 a share and revenue of $1.32 billion for the fourth quarter.

Gas and oil exploration and production company Anadarko is estimated to report a profit of 71 cents a share on revenue of $3.39 billion in the fourth quarter.

Two Top Barclays Executives Depart: ”Two top Barclays PLC executives announced their resignations Sunday, as the giant British bank swept out some of the last vestiges of its scandal-plagued prior management team.”

Fun Fades at Investment Clubs: “Once-popular investment clubs are suffering or even disappearing, casualties of a deep shift in investor psychology.”

Boise Cascade to Headline Busy Week for IPOs: “Roughly a half-dozen initial public offerings are on tap in a scattershot week that should see debuts from a range of sectors. Headlining is plywood maker Boise Cascade LLC, which hopes to build on the recent strength of a rebounding housing market.”

Ahead of the Tape: Yum’s Yuck Factor in China: “You won’t find “45-day chicken” in any cookbook, but it has become a potential recipe for disaster at Yum Brands Inc. The term for preternaturally fast-growing birds allegedly pumped full of dangerous hormones, all over China’s media and blogosphere in December, threatens the fast-food giant’s critical business in that country.”

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